TORRANCE —The captives for Toyota and Lexus are now offering special APRs and rebates to qualified military personnel and inactive reserves through participating dealers.

“In appreciation for all that they have done, and continue to do, we hope these rebates and special APRs make it a bit easier for our men and women in uniform who are in the market for a new vehicle,” said Mike Groff, group vice president of sales, marketing and product development for Toyota and Lexus financial services.

“We understand that it’s certainly a tough economic time right now for many military families, so it’s our hope that these special APRS and rebates, which can be coupled with other incentives, will help our troops save some much-needed and hard-earned money.”

In recognition of their service, qualified Toyota buyers under the Welcome Home Special APR Program can receive a 1.9 percent APR for up to 60 months when financing any new 2011 or 2012 Toyota vehicle through a participating Toyota dealer and TFS, according to the company. A $500 military rebate also may be used in conjunction with the special APR, reported F&I and Showroom magazine.

Lexus buyers who qualify under the Welcome Home Special APR Program can receive a 0.9 percent APR for up to 60 months on new 2011 or 2012 ES and IS (includes all sedans, Convertible and IS F) and 2012 RX350 vehicles, or 1.9 percent APR for up to 60 months on any other new Lexus vehicle when financing through a participating Lexus dealer and LFS, according to the company.

A $750 military rebate also may be used in conjunction with the special APRs.

SANTA BARBARA — A study by ALG, an independent subsidiary of TrueCar Inc., indicated that Toyota’s perceived quality score rose more than two percent over the last six months, closing the gap with leading mainstream brand Honda. Additionally, Lexus once again came out on top among luxury brands, according to the company’s Fall 2011 Perceived Quality Study (PQS).

“The continued rally of Toyota is evidence of the brand’s widespread reputation for quality and ownership loyalty. This is the third straight survey where Toyota has shown relatively strong growth,” said Eric Lyman, vice president of residual value solutions for ALG. “If this trend continues, the brand might soon regain the top spot from Honda in the mainstream category.”

Twice a year, ALG surveys approximately 3,000-4,000 U.S. consumers to gauge perceptions of a number of mainstream and luxury automotive brands for its PQS, reported F&I and Showroom magazine. Of the 23 brands included in the Fall 2008 survey that remain in the survey today, Ford brands, Kia and Hyundai have racked up the biggest long-term gains, according to ALG. Hyundai led the group by moving from 18th place to 9th place, Ford Cars and Ford Trucks moved from 15th to 7th and 8th to 3rd place, respectively, and Kia jumped from 23rd place in 2008 to 18th place.

“These three automakers have made impressive efforts to improve brand perception and we can see that it has truly paid off in the mainstream rankings,” Lyman added. “The perception of where luxury brands stand in relation to each other seems to be solidly cemented in the minds of consumers, owing to the consistency of the luxury rankings.”

NAGOYA — The head of Toyota Motor Corp.’s Lexus brand said global sales of the upscale vehicles will likely fall short of last year’s total, with the brand set to lose its long-held status as the top-selling luxury car in the U.S.

“We would have ended up at the same level as last year, but now we’re probably going to be short,” Lexus marketing and product planning general manager Karl Schlicht said in an interview.

He blamed the likely fall on a combination of natural disasters in Japan and Thailand, a stronger yen against the dollar and tougher competition in the luxury market, according to The Wall Street Journal.

On Wednesday, Toyota said it would extend production cutbacks through Nov. 12 at several North American plants due to parts shortages from its Thailand operations.

Last month, its U.S. Lexus Division’s sales fell 14 percent from a year ago to 18,092 vehicles. Through Oct. 31, total U.S. Lexus sales were 153,739, down 16 percent from the same period a year ago, In contrast, BMW AG sold 246,888 vehicles in the same 10-month period.

Mr. Schlicht, the first non-Japanese manager to run Lexus, acknowledged the division is likely to relinquish its longtime position as the top-selling luxury brand in the U.S.

“To be honest, the competition has gotten stronger, but I don’t think it’s fair to say we lost the crown this year just because of that,” he said, noting production lost due to Japan’s March earthquake and the current flooding in Thailand.

Mr. Schlicht said there are no plans to move production of Lexus vehicles from Japan to markets such as the U.S. to cope with the yen’s surge to recent all-time highs.

But he indicated that could happen eventually if the Japanese currency stabilizes at the current elevated levels or strengthens further.

“Clearly [Toyota] management understands that if this persists or gets worse we may have to move some production” offshore, he said.

Currently, all Lexus models are made in Japan with the exception of some RX crossover sport-utility vehicles sold in North America, which are produced in Ontario, Canada.

A higher yen erodes the value of dollar-denominated profits and makes Japanese exports less competitive overseas.

Mr. Schlicht said the fall from No. 1 in the U.S. will give Lexus some “breathing space” to prepare for new cars, such as a remodeled GS midsize sedan, noting the brand hasn’t introduced a full-size sedan since 2007.

“In some ways, it’s kind of a relief that allows us to change the brand direction a bit and refocus on the next generation of cars without having that heavy burden” of being the luxury sales leader in the U.S., Mr. Schlicht said.

The GS, due in showrooms in February, will showcase edgier styling—such as a new front grille with spindles—and a sporty ride, which Toyota hopes will help the brand appeal to younger drivers.

Noting that the average age of Lexus buyers is older than competing brands globally, Mr. Schlicht said the brand is positioning itself to broaden sales beyond the baby boomers that have been its traditional core demographic.

“We’re trying to target a different kind of buyer to prepare for the next generation,” he said.

While the U.S. is by far the biggest market for Lexus, Mr. Schlicht said that he is encouraged by positive sales trends in China, Europe and Japan.

He noted that the new CT hybrid compact has done well in Europe and Japan, and said China was on track for a record year before the natural disasters disrupted supply.

Last year, Lexus sold 53,000 vehicles in China, 33,000 in Japan and 31,000 in Europe—its top three markets outside of the U.S.

Mr. Schlicht also said Lexus needs to broaden its lineup with more sporty two-door vehicles and hinted a successor to the discontinued SC coupe may be on display at the North American International Auto Show in January.

NAGOYA — The head of Toyota Motor Corp.’s Lexus brand said global sales of the upscale vehicles will likely fall short of last year’s total, with the brand set to lose its long-held status as the No. 1 luxury car in the U.S.

“We would have ended up at the same level as last year, but now we’re probably going to be short,” Lexus marketing and product planning general manager Karl Schlicht said in an interview.

He blamed the likely fall on a combination of natural disasters in Japan and Thailand, a stronger yen against the dollar and tougher competition in the luxury market, reported The Wall Street Journal.

In 2010, Lexus sold 410,000 vehicles globally, of which 229,000 were sold in the U.S. That was down from the brand’s all-time peak global sales of 518,000 vehicles in 2007, including a record 329,000 in the U.S.

Last month, its U.S. Lexus Division’s sales fell 14.2 percent from a year ago to 18,092 vehicles. Through Oct. 31, total U.S. Lexus sales were 153,739, down 16.2 percent from the same period a year ago, compared to BMW AG’s 246,888 vehicles.

Mr. Schlicht, the first non-Japanese manager to run Lexus, acknowledged the division is likely to relinquish its longtime position as the top-selling luxury brand in the U.S.

“To be honest, the competition has gotten stronger, but I don’t think it’s fair to say we lost the crown this year just because of that,” he said, noting production lost due to Japan’s March earthquake and the current flooding in Thailand.

Mr. Schlicht said there are no plans to move production of Lexus vehicles from Japan to markets such as the U.S. to cope with the yen’s surge to recent all-time highs.

But he indicated that could happen eventually if the Japanese currency stabilizes at the current elevated levels or strengthens further.

“Clearly [Toyota] management understands that if this persists or gets worse we may have to move some production” offshore, he said.

Currently, all Lexus models are made in Japan with the exception of some RX crossover sport utility vehicles sold in North America, which are produced in Ontario, Canada.

A higher yen erodes the value of dollar-denominated profits and makes Japanese exports less competitive overseas.

Mr. Schlicht said the fall from No. 1 in the U.S. will give Lexus some “breathing space” to prepare for new cars, such as a remodeled GS midsize sedan, noting the brand hasn’t introduced a full-size sedan since 2007.

“In some ways, it’s kind of a relief that allows us to change the brand direction a bit and refocus on the next generation of cars without having that heavy burden” of being the luxury sales leader in the U.S., Mr. Schlicht said.

The GS, due in showrooms in February, will showcase edgier styling—such as a new front grille with spindles—and a sporty ride, which Toyota hopes will help the brand appeal to younger drivers.

Noting that the average age of Lexus buyers is older than competing brands globally, Mr. Schlicht said the brand is positioning itself to broaden sales beyond the baby boomers that have been its core demographic.

“We’re trying to target a different kind of buyer to prepare for the next generation,” he said.

While the U.S. is by far the biggest market for Lexus, Mr. Schlicht said that he is encouraged by positive sales trends in China, Europe and Japan.

He noted that the new CT hybrid compact has done well in Europe and Japan, and said China was on track for a record year before the natural disasters disrupted supply.

Last year, Lexus sold 53,000 vehicles in China, 33,000 in Japan and 31,000 in Europe—its top three markets outside of the U.S.

Mr. Schlicht also said Lexus needs to broaden its lineup with more sporty two-door vehicles and hinted a successor to the discontinued SC coupe may be on display at the North American International Auto Show in January.

Lexus is poised to lose its lead in the U.S. for the first time in more than a decade, with BMW and Mercedes-Benz snaring customers just as the Toyota Motor Corp. luxury brand struggles to recover from the Japanese earthquake.

Lexus has trailed Bayerische Motoren Werke AG and Daimler AG’s Mercedes for four straight months after clinging to last year’s lead by 9,216 cars. The drop for Lexus, which makes all but one model in Japan, has intensified since the earthquake disrupted supplies, temporarily reducing production by 50 percent, reported Bloomberg.

BMW and Daimler are adding models in the U.S., increasing local production and offering higher incentives than Lexus to boost sales and hedge against overexposure to booming demand in China. The earthquake has added to Toyota City, Japan-based Lexus’s woes after record recalls last year tainted its image. BMW’s U.S. deliveries through April rose to 71,417 vehicles, leading Mercedes’ 71,388 and Lexus’s 64,932.

“The house was on fire at Lexus before the earthquake hit,” said Eric Noble, president of The Car Lab, an industry research company in California. “If the current situation wakes them up to that, then some good may come from it.”

BMW, the world’s largest luxury-car maker, aims to grab market share this year backed by the overhauled X3 SUV, which is 3 inches longer and 1 inch wider to appeal more to U.S. drivers. The Munich-based company has a four-month order backlog, forcing some customers to wait as long as half a year for the $36,750 SUV, Chief Executive Officer Norbert Reithofer said May 4.

The manufacturer moved X3 assembly to the U.S. from Austria last year as part of a $750 million expansion of its factory in South Carolina aimed at better capitalizing on the U.S. market. The maker of BMW, Mini and Roll-Royce cars is considering adding another model at the plant, which also makes the X5 and X6 SUVs.

“We are really working all out,” Reithofer said. BMW’s U.S. factory boosted capacity by 20,000 vehicles to 260,000 to meet the higher SUV demand.

Mercedes, the world’s second-biggest luxury-car seller, may be best positioned to overtake Lexus, thanks to the updated C- Class, presented in Detroit in January, its best-selling model.

The company, which advertised at the Super Bowl for the first time this year, is spending $290 million to upgrade its factory in Alabama, where it will start building a revamped M- Class SUV later in 2011. Mercedes already rolled out overhauled versions of the CLS coupe and SLK roadster this year.

Mercedes will likely sell 254,100 cars and SUVs in 2011, edging out BMW’s 250,400 deliveries, for first place in the U.S. sales race, according to forecaster IHS. Lexus is projected to drop to third with sales of 192,900 vehicles.

“Lexus is in a sort of lull in their product cadence,” said Bill Visnic, an analyst with Santa Monica, California-based auto website Edmunds.com. The $46,100 Lexus GS sedan, which competes with the BMW 5-Series and Mercedes E-Class, “is aging and doesn’t hold a candle to what BMW and Mercedes are doing.”

Lexus generally earns less per vehicle than BMW and Mercedes, with the company’s cars and sport-utility vehicles selling for an average of $42,485, according to Edmunds.com. That compares with $48,179 on average for BMWs and $52,695 for Mercedes-Benz, based on Edmunds data, as both brands have a broader line of sedans with V-8 or larger engines. The average new vehicle in the U.S. costs $27,476.

The higher average selling price give German luxury marques more room to provide greater incentives. Mercedes currently spends an average of $3,625 on deals such as cheap leases and generous trade-in terms, followed closely by BMW’s $3,275, while Lexus spent just $1,879, according to research firm Autodata Corp, based in Woodcliff Lake, New Jersey.

Lexus began losing more ground last year in the U.S., the world’s largest market for luxury cars, against German rivals as Toyota recalled more than 10 million vehicles globally for problems related to accelerator pedal interference, including Lexus models. The Toyota unit, which has beaten BMW and Mercedes in the U.S. since 2000, saw its lead over BMW last year slump 52 percent to 9,216 vehicles.

The recalls led to a “softening” in luxury buyers’ interest in Lexus, said Alexander Edwards, president of Strategic Vision, a San Diego-based consumer research company that surveys 300,000 people a year for its automotive studies.

“For people who were sitting on the fence about Lexus, we saw them remove the brand from the shopping list,” Edwards said.

Lexus, created by Toyota in 1989 to win over U.S. luxury auto buyers, held test drives of its inaugural model, the LS sedan, in Cologne, Germany, in May 1989 to emphasize its goal of competing directly with the European brands that dominated the luxury segment.

The brand achieved its target in the U.S., combining cars famed for reliability and dealers that provided a level of service customers were unaccustomed to. In 2000, 11 years after its creation, Lexus surpassed its German rivals to become the top-selling U.S. luxury marque, a position it held until the end of last year.

The U.S. market is particularly important for Lexus because the brand has struggled to catch on elsewhere. The carmaker’s market share in Europe thus far in 2011 is 0.2 percent. In China, Lexus sold just 49,000 cars last year, trailing market leader Audi’s sales of 236,000 vehicles. Volkswagen AG’s Audi, Mercedes and BMW all delivered more than 1 million cars last year globally. Lexus sold 410,000.

Lexus isn’t sitting still. The company aims to boost its appeal with designs that are “more passionate,” Mark Templin, the brand’s U.S. chief, said April 18 in New York.

Working in Lexus’s favor is a loyal following of drivers won over by the company’s customer service, the first to include amenities such as cappuccino machines in dealer showrooms, complimentary loaner cars, home visits by salesmen, and airport shuttles for busy executives dropping off cars for service.

“There are going to be customers who will wait for Lexus models to become available,” said Jim Hall, principal of 2953 Analytics, a consulting firm in Birmingham, Michigan. Whether Lexus can then win back wayward drivers “depends on how well BMW and Mercedes take care of them. They’re going to have to work for it. 2012 is probably going to be a dogfight.”

Mercedes and BMW are aiming to keep the customers they gain. The two are improving their Manhattan showrooms, with Mercedes opening a new dealership this month on 11th Avenue with soaring ceilings and changing light colors. Three blocks away, on 57th Street, BMW is spending money at its dealership to free up floor space and renovate the facade.

Closing on all three leaders is Audi, which will add further pressure on Lexus’s GS when the new A6 sedan goes on sale this summer. The VW unit, already the leader in Europe and China, is counting on further U.S. growth to help achieve a goal of leapfrogging BMW and Mercedes-Benz to become the world’s top premium seller by 2015.

Audi projects double-digit growth in U.S. deliveries in 2011 after selling more than 100,000 cars and SUVs last year for the first time. In addition to the A6, Audi will start selling the A7 coupe and the TT RS sports-car in the U.S. this year.

“The most interesting change hasn’t been with those three, but with Audi,” Edwards with Strategic Vision said. “Audi has seen very strong movement forward, capturing some aspirational interest among Gen-Y buyers, the younger consumer group that everyone wants to attract.”

NEW YORK – Lexus’ chief says looming earthquake-related inventory shortages almost certainly will end the brand’s decade-long run as the top-selling luxury brand in the United States.

Lexus dealers will begin to feel shortages of cars this week, and definitely in May, as a result of the March 11 Japan earthquake, reported Automotive News.

Mark Templin, general manager of Lexus Division, said dealers have a tight 30-day inventory across all model lines. Some models, such as the recently launched CT 200h compact hybrid hatchback, are nearly sold out.

“It’s a frustrating experience,” Templin said last week at the New York auto show.

The earthquake stopped production of various parts in Japan, crimping assembly schedules. Last year, No. 2 Mercedes trailed Lexus by less than 5,000 units in the United States.

Lexus is acting to retain customers, such as allowing customers to extend their concluded leases by two six-month terms. Given the high lease traffic from three years ago, a record number of Lexus customers are coming off lease this summer.

Templin said many Lexus customers are buying out their leases because the shortage of used cars means the value of off-lease cars is often more than their residual value.

Templin warned dealers against taking advantage of the situation.

“Our dealers can’t go gouging customers. Just because there are a limited number of cars, we are not plywood salesmen when the hurricane comes. How do you explain to a customer coming off lease that now we are raising your payment substantially? That’s not the way we do business,” he said.

Despite the shortage of cars, Lexus will forge ahead with its May and June advertising schedule, which have many brand-oriented commercials. However, the regional dealer groups, which typically traffic in deal-based advertising, have been told to shut down their efforts.

Longer term, Lexus likely may not be the best-selling luxury brand ever again, as Mercedes-Benz and BMW move further down-market to hit fuel economy targets.

“It’s being driven by regulations, not demand. It won’t be that long before some [luxury brand] is selling 500,000 cars a year,” Templin said.

“If we do that, we have to grow our dealer network, or ask our current dealers to expand even more, and I don’t want to do either,” Templin said.

“If you are in the business to grow volume for volume’s sake, you stop being special. That’s not what we are about.”